Aletheia Capital initiates Broadcom stock with Buy rating, $400 price target

Investing.com - Aletheia Capital initiated coverage on Broadcom (NASDAQ:AVGO) with a Buy rating and a $400 price target on Monday. The semiconductor giant, currently valued at $1.53 trillion, has earned a "GREAT" financial health score according to InvestingPro data, with 26 analysts recently revising earnings estimates upward.

The research firm’s analysis is based on a 30x FY27F price-to-earnings ratio and highlights expectations that Broadcom’s AI revenue will double year-over-year in both fiscal years 2026 and 2027, effectively quadrupling over three years.

Aletheia Capital projects Broadcom’s AI revenue will reach $80-85 billion in fiscal year 2027, positioning it in the upper half of the company’s $60-90 billion serviceable available market projection.

The firm notes that Broadcom only needs to confirm four out of seven customers and prospects to reach these projections, suggesting potential upside, while near-term growth may depend on CoWoS supply availability.

Aletheia Capital forecasts Broadcom’s free cash flow will triple to $60-65 billion in fiscal year 2027 from under $20 billion last year, potentially leading to increased share buybacks and dividends alongside debt reduction.

In other recent news, Broadcom Limited has seen several updates from financial analysts and developments in the AI sector. Bernstein SocGen Group has maintained an Outperform rating for Broadcom, with a price target of $400, citing strong demand in the compute sector and confidence in the company’s growth trajectory. This was echoed by KeyBanc, which reiterated an Overweight rating and a $420 price target, predicting higher earnings results for the upcoming fiscal quarter due to robust AI demand. Mizuho also maintained an Outperform rating with a $410 price target, highlighting Broadcom’s strength in AI custom silicon and addressing investor concerns about potential margin dilution from a significant $10 billion deal with a customer believed to be OpenAI.

Meanwhile, Broadcom faces competition in the AI networking market from Cisco Systems, which announced new chip technology aimed at enhancing AI data center connectivity. Cisco’s unveiling of the Silicon One P200 chip and 8223 routing systems is seen as a direct challenge to Broadcom’s position in this rapidly growing market. These developments underscore the dynamic nature of the AI sector and its impact on technology companies like Broadcom.

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